IHS Markit Canada Manufacturing PMI: Sharpest Rise In Manufacturing Output

Reading time ( words)

August data pointed to a sharp and accelerated upturn in Canadian manufacturing output, but the latest survey also revealed a loss of momentum for new business growth. Anecdotal evidence suggested that some clients had adopted a wait-and-see approach to spending in response to heightened business uncertainty and ongoing global trade tensions.

Steel and aluminum tariffs contributed to the fastest rise in manufacturers’ input costs since April 2011. At the same time, factory gate charges increased at one of the sharpest rates since the survey began in 2010.

The seasonally adjusted IHS Markit Canada Manufacturing Purchasing Managers’ Index (PMI) dropped fractionally to 56.8 in August, from 56.9 in July, to signal the weakest overall improvement in business conditions since May. Slower new business growth was the main factor weighing on the headline index in August. Nonetheless, the latest reading remained well above the long-run survey average (53.0).

Production volumes increased at a robust pace in August, with the rate of expansion the sharpest since December 2010. Manufacturers commented on increased workloads and successful efforts to boost operating capacity at their plants.

New order growth eased to a four-month low, despite a slightly stronger contribution from export sales. The latest rise in new work from abroad was the greatest since May, partly driven by rising demand from clients operating in the energy sector. However, there were also reports that U.S. trade tariffs had dented competitiveness during the latest survey period.

Concerns about the outlook for export sales acted to dampen business confidence in August. Reflecting this, manufacturers indicated that their output growth expectations had slipped to a five-month low. Despite reporting more subdued growth prospects for the year ahead, latest data indicated a robust and accelerated rise in payroll numbers across the manufacturing sector.

Meanwhile, manufacturing firms continued to boost their stocks of inputs during August, which reflected pre-purchasing of metals ahead of trade tariffs, alongside efforts to mitigate against supply chain delays. The overall increase in pre-production inventories was the sharpest recorded since the survey began in October 2010.

Strong demand for raw materials contributed to greater input cost pressures and the second-largest lengthening of suppliers’ lead-times in the survey history. The latest increase in overall cost burdens was the steepest for almost seven-and-a-half years. At the same time, the introduction of trade tariffs on steel and aluminum resulted in another strong increase in average prices charged by manufacturers in August. 

Regional Highlights:

  • Quebec remained the best-performing region monitored by the survey in August
  • Manufacturers in Alberta & BC and Quebec experienced a relatively strong rate of new export order growth
  • Ontario was the weakest-performing area in terms of new work from abroad
  • All regions recorded sharp increases in their average cost burdens during August


Christian Buhagiar, president and CEO, SCMA

“Canadian manufacturers continued to boost their production volumes in August, with the latest upturn the fastest since the end of 2010. However, a slowdown in new business growth meant that the headline PMI dipped to a three-month low.

“The latest survey highlighted that steel and aluminum tariffs pushed up input costs and acted as a headwind to export sales in U.S. markets. The rate of input price inflation was the steepest for almost seven-and-a-half years, which underpinned another strong increase in average prices charged by manufacturing companies.” 

About Supply Chain Management Association

The Supply Chain Management Association (SCMA) is Canada’s largest association for supply chain management professionals. We represent 7,500 members as well as the wider profession working in roles that cover sourcing, procurement, logistics, inventory, and contract management. SCMA sets the standards for excellence and ethics, and is the principal source of professional development and accreditation in supply chain management in Canada.

About IHS Markit

IHS Markit is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world’s leading financial institutions.

About PMI

Purchasing Managers’ Index (PMI) surveys are now available for over 40 countries and also for key regions including the eurozone. They are the most closely-watched business surveys in the world, favoured by central banks, financial markets and business decision makers for their ability to provide up-to-date, accurate and often unique monthly indicators of economic trends.  



Suggested Items

Tax Incentives Brighten Future for Solar Equipment Industry in 2016

01/06/2016 | Dick Crowe, Burkle NA
Recent budget legislation passed by Congress surprised many with the renewal of the tax incentives for Solar Power. What was to be a tumultuous, very busy year for Solar Manufacturers in 2016 and then a sharp drop in 2017 will stabilize production and lead to more efficient operations.

Copyright © 2019 I-Connect007. All rights reserved.